Australian Retail Sales surpassed expectations by a wide margin in July as consumer spending propped up on food and clothing, suggesting demand is recovering despite surging inflation and rising interest rates, the latest data published by the Australian Bureau of Statistics (ABS) showed on Monday.
Retail Sales rose 1.3% in July, the seventh straight month of growth and beat the consensus forecast of a 0.3% increment. The gauge booked a 0.2% increase in June.
Australian retail sales volumes rose 1.4% in the July quarter of 2022, hitting a new record level, for the third consecutive quarter, the ABS showed about a month ago.
In an initial reaction to the data, AUD/USD remained little changed above 0.6850. The pair was last seen trading at 0.6857, down 0.48% on the day.
Why do Australian Retail Sales matter to traders?
The primary gauge of Australia’s consumer spending, the Retail Sales, is released by the Australian Bureau of Statistics (ABS) about 35 days after the month ends. It accounts for approximately 80% of total retail turnover in the country and, therefore, has a significant bearing on inflation and GDP. This leading indicator has a direct correlation with inflation and growth prospects, impacting the Reserve Bank of Australia’s (RBA) interest rates decision and AUD valuation. The stats bureau uses the forward factor method, ensuring that the seasonal factors are not distorted by COVID-19 impacts.